Could you introduce MNREC and your flagship Khalzan Buregtei (KB) REE project?

The first exploration license (later matured into a mining license) on the project was issued in the early 2000s. About 10,000 m of diamond drilling (DD) were carried out in 2012-2013 by an Australian company who owned the project at the time. This was part of a wave of exploration ignited by China’s imposition of export restrictions on REE, but later that same year, China removed the ban and the market re-stabilized. Soon after, the general commodities downturn followed. The KB project was put on the shelf until 2020 when the US started talking about the critical minerals supply chain again, and greater awareness about the importance of REE for the energy transition emerged. Geopolitical tensions between the world’s largest powers bring the REE space to an interesting juncture, so the KB project came into the spotlight. KB is a large development with extremely attractive economics, as our 2020 PEA suggested.

The KB project is owned by the Trade and Development Bank (TDB), the largest bank in the country. Could you elaborate on the existing work done at the KB and the characteristics of the project?

The KB ore body is of substantial size but low grade, almost ten times lower compared to reference projects in Australia or Africa, but what makes the project highly attractive is the high content of heavy rare elements (dysprosium and terbium), which are highly valuable in magnets. Whereas the supply of light REEs is stable, with abundant deposits, heavy REEs are scarcer and more expensive. In preparation for the PFS release, we need extensive drilling to determine the size of the resource and reserve. This year alone, we completed 20,000 m of DD, with samples sent to Perth for metallurgical testing. Due to be ready by mid-2024, the PFS has three primary purposes: to establish the resource with more confidence; determine the processing technology; and calculate the capital expenditure. Next year, we will commence the ESIA works, together with water study and power. We are considering a 100% renewable energy supply as a core component of the project. What end markets do you target?

We aim to make a difference for the region by inaugurating Mongolia’s first rare earths processing facility at the site. We do not want to limit ourselves to processing concentrate alone but engage in hydrometallurgy to yield a mixed rare earth oxide or carbonate as a final product. If the material is processed in China, the whole point of a resilient supply chain that is independent of China is defeated. Also, producing oxide or carbonate of high content reduces the overall mass of the product. We estimate to produce between 15,000 to 20,000 tt/y of product at 90% purity. MNREC is already in talks with logistics companies to define the best transport options, including air transport.

We will target offtakes with OEMs looking for a green product, produced using renewable energy and using a modern and environmentally friendly dry tailings facility that recycles 100% of the water, stacking the waste into a solid form. Could you provide more details about the electricity options to power an eventual processing plant?

While the entire western region of Mongolia uses about 48 MW, our processing facility is projected to require about 100-120 MW, exceeding the current supply. Also, up to 80% of the region’s energy is currently imported from Russia, while the national transmission lines are outdated and unstable. Faced with these challenges, we have two alternatives: One is to set up a conventional thermal coal power plant, and the other, which we prefer, is to look into more expensive yet significantly cleaner renewable energy solutions. Also, about 80 km away from our deposit, the government is building the Erdeneburen hydropower with a nominal capacity of 90 MW, operational at only 60% from what we have heard so far, but this could be another alternative for part of the electric supply. Do you have a final message?

Mongolia can secure those critical supplies of metals and minerals the world needs. MNREC’s goal is to build the first rare earth processing facility and produce mixed rare earth oxides by 2028.